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Macro 1

17 Questions
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Questions and Answers
  • 1. 
    Economic growth is best defined as an increase in:
    • A. 

      Either real GDP or real GDP per capita.

    • B. 

      Nominal GDP

    • C. 

      Total consumption expenditures

    • D. 

      Wealth in the economy

  • 2. 
    Real GDP per capita:
    • A. 

      Cannot grow more rapidly than real GDP.

    • B. 

      Cannot grow more slowly than real GDP.

    • C. 

      Necessarily grows more rapidly than real GDP.

    • D. 

      Can grow either more slowly or more rapidly than real GDP.

  • 3. 
    Real GDP per capita is found by:
    • A. 

      Adding real GDP and population.

    • B. 

      Subtracting population from real GDP.

    • C. 

      Dividing real GDP by population.

    • D. 

      Dividing population by real GDP.

  • 4. 
    Which of the following best measures improvements in the standard of living of a nation?
    • A. 

      Growth of nominal GDP.

    • B. 

      Growth of real GDP.

    • C. 

      Growth of real GDP per capita

    • D. 

      Growth of national income

  • 5. 
    If a nation's real GDP increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, it's real GDP per capita will:
    • A. 

      Remain constant.

    • B. 

      Fall by 6 percent.

    • C. 

      Rise by 6 percent

    • D. 

      Fall by 12 percent.

  • 6. 
    For a nation's real GDP per capita to rise during a year:
    • A. 

      Consumption spending must increase.

    • B. 

      Real GDP must increase more rapidly than population.

    • C. 

      Population must increase more rapidly than real GDP.

    • D. 

      Investment spending must increase.

  • 7. 
    Growth is advantageous to a nation because it:
    • A. 

      Promotes faster population growth.

    • B. 

      Lessens the burden of scarcity.

    • C. 

      Eliminates the economizing problem.

    • D. 

      Slows the growth of wants.

  • 8. 
    For comparing changes in potential military strength and political preeminence, the most meaningful measure of economic growth would be:
    • A. 

      Changes in total nominal output.

    • B. 

      Changes in total real output

    • C. 

      Changes in per capita output.

    • D. 

      Changes in per family output

  • 9. 
    Given the annual rate of economic growth, the "rule of 70" allows one to:
    • A. 

      Determine the accompanying rate of inflation.

    • B. 

      Calculate the size of GDP gap.

    • C. 

      Calculate the number of years required for real GDP to double.

    • D. 

      Determine the growth rate of per capita GDP.

  • 10. 
    The number of years required for real GDP to double can be found by:
    • A. 

      Dividing the annual growth rate by 0.07

    • B. 

      Multiplying the annual growth rate by 70.

    • C. 

      Dividing 70 by the annual growth rate.

    • D. 

      Adding 14 to annual growth rate.

  • 11. 
    At an annual growth rate of 4 percent, real GDP will double in about:
    • A. 

      17.5 years.

    • B. 

      20 years

    • C. 

      13.5 years

    • D. 

      15 years

  • 12. 
    At an annual growth rate of 7 percent, real GDP will double in about:
    • A. 

      11.5 years

    • B. 

      10 years

    • C. 

      13.5 years

    • D. 

      9 years

  • 13. 
    If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately:
    • A. 

      22 years

    • B. 

      20 years

    • C. 

      14 years

    • D. 

      8 years

  • 14. 
    If the economy's real GDP doubles in 18 years, we can:
    • A. 

      Not say anything about the average annual rate of growth.

    • B. 

      Conclude that its average annual rate of growth is about 5.5 percent.

    • C. 

      Conclude that its average annual rate of growth is about 2 percent.

    • D. 

      Conclude that its average annual rate of growth is about 4 percent

  • 15. 
    About _____ of US economic growth comes from improved productivity (as opposed to added inputs.)
    • A. 

      1/4

    • B. 

      1/3

    • C. 

      1/2

    • D. 

      2/3

  • 16. 
    Between 1950 and 2002, US real GDP grew at an average annual rate of about:
    • A. 

      1.3%

    • B. 

      4.2%

    • C. 

      3.5%

    • D. 

      2.1%

  • 17. 
    Recurring upswings and downswings in an economy's real GDP over time are called:
    • A. 

      Recessions.

    • B. 

      Business cycles.

    • C. 

      Output yo-yos.

    • D. 

      Total product oscillations.

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